Terminating apprenticeships – a warning
Dismissing an apprentice early could result in a significant claim for damages.
Mr Kinnear was employed by Marley as an apprentice roof tiler on a four year fixed term contract, ending in November 2018. In June 2016 Mr Kinnear was informed that he was being made redundant due to a downturn in work, and was given a week’s notice. He raised a breach of contract claim against Marley in relation to the early termination of his contract.
The tribunal in Inverness found that Mr Kinnear was employed on a contract of apprenticeship and “as such was entitled to be trained by the respondent company and employed by them until the apprenticeship finished. In this case that would be until November 2018.”
The tribunal considered the length of time left on his apprenticeship, his continuing loss (due to a general lack of available apprenticeships it was unlikely he would be able to complete his apprenticeship) and the steps Mr Kinnear had taken to mitigate his loss. He was awarded £25,000 – the maximum award for breach of contract claims in the employment tribunal.
Does this mean that an apprentice cannot be dismissed early?
The answer to this will depend on the type of contract the apprentice is engaged on, as explained below.
Contracts of apprenticeships
In Scotland most apprentices work under a contract of apprenticeship.
If it is a ‘true’ contract of apprenticeship it can only be terminated in limited situations, including:
- Misconduct that is so serious that the apprentice is effectively unteachable;
- Illness that is so severe that it prevents the apprentice from learning the trade; or
- Business closure or a fundamental change in the nature of the business. ‘Ordinary’ redundancy because of a downturn in trade, like in Kinnear v Marley Eternit, would not be enough to justify terminating a contract of apprenticeship early.
If a contract of apprenticeship is terminated early for another reason (for example, poor performance) the apprentice may be able to claim compensation, which could include:
- Wages for the remainder of the contract of apprenticeship;
- Loss of training; and
- Loss of status/ reduction in future employment prospects.
A contract of apprenticeship does not need to be in a particular form or to contain specific provisions. It can be created even without the use of terminology such as ‘apprentice’ or ‘apprenticeship’. The defining features are that it is for a fixed term and that training is the main purpose of the arrangement.
If a contract with an apprentice in Scotland contains early termination provisions then this risks it being viewed as a contract of employment rather than a true contract of apprenticeship (which could impact on issues such as national minimum wage liability).
In England and Wales, most apprentices are engaged under an apprenticeship agreement, which must be in a prescribed form and satisfy certain conditions (which vary depending on the specific type of agreement / whether it is a Welsh apprenticeship).
An apprenticeship agreement can contain a clause setting out circumstances in which the agreement may be terminated early, for example, in cases of poor performance or redundancy. This reduces the risk of a breach of contract claim in the event of early termination.
All apprentices are treated as “employees” under the Employment Rights Act 1996 so they benefit from the same statutory protections as ‘ordinary’ employees.
If an apprentice’s contract (whether a contract of apprenticeship or apprenticeship agreement) is not renewed at the end of the apprenticeship, the apprentice will be considered to have been dismissed, usually by reason of ‘some other substantial reason’. Depending on their length of service and how the dismissal is handled, that could give rise to an unfair dismissal claim.
Workbox users can access more detail here.
This is a tricky area. If you would like further advice on apprenticeships or help drafting a contract, please get in touch with a member of the employment team.